Guest Post: Getting a Mortgage When You're Getting Divorced
Getting Mortgage Advice to Understand Your Options
Your home can be the asset that gives both partners a fresh start. A key first step is to talk to your Mortgage Broker about how the value of your home and the power of your mortgage can help you both move forward on firm footing. Knowing the mortgage options available to you will be valuable when discussing the terms of your Separation Agreement.
For example, you may qualify for the federal Home Buyers’ Plan, the provincial First Time Home Buyers’ Program, and/or the provincial property transfer tax exemption.
Considerations For New Mortgage & Financing Options
Your Mortgage Broker will start by asking some key questions:
1) Are you hoping to stay in the existing home? Many couples assume that the house must be sold – but that’s not always the case. Your Mortgage Broker has resources that can help one partner remain in the home. If you’d like to refinance, we can determine if the equity can pay off household debt and provide a payout if it’s required. Or one spouse can purchase the home outright from the other spouse who then comes off title. A Spousal Separation Mortgage allows a buyout to 95 per cent, which can provide a fair buyout and possibly pay off any other joint debt.
2) Do you want to buy a new home? Your Mortgage Broker can let you know what you can qualify for and what is affordable for you in your current financial situation.
3) Will you need to boost your credit rating? Your credit rating is an important factor in qualifying for a mortgage and determining what interest rate you’ll pay. Your Broker has some quick strategies to help you polish your credit, and to build (or rebuild) your credit over time.
Independent Legal Advice (ILA) on Your Separation Agreement
An important note to consider is whether to obtain Independent Legal Advice (ILA) on your Separation Agreement. Although all lenders reserve the right to request that you obtain ILA as a condition of mortgage approval, your Mortgage Broker will review your individual situation and advise you regarding the requirements of the particular lender you are considering for your new mortgage.
Start Early!
For many separating couples, their home is their most important asset. That’s why seeking the advice of a mortgage professional very early in the process can help set the stage for a successful separation – so the two of you can each make the best possible start on a new path. We can help make a challenging time a little more hopeful and less overwhelming with personal mortgage advice based on your individual needs.
Dana Stauber is a mortgage broker in Vernon, British Columbia with Invis: Canada’s Mortgage Experts.